Confronting the Guidance Imperative

You remember the term "economic boom," don't you? Well, will the boom ever resume?

We experienced extraordinary demand for new products in the post-war period of the 1950s and 1960s. We bought new cars, televisions and household appliances. Our manufacturing economy  boomed.

But products weren't enough. We needed new services. We needed financial services to tend to our wealth and health care services to tend to our health. So our services economy boomed in the 1970s, 1980s and beyond.

The technology boom of the 1990s represented an impressive fusion of products and services in many cases. It was an era of solutions. Just think of IBM's striking turnaround under Lou Gerstner or GE's long boom under Jack Welch.

But we're not booming anymore. The solutions era -- just like the product and services eras that preceded it -- seems to have flat-lined. So what will drive the next stage of value creation and enable suppliers to generate new growth? 

I believe the answer lies in one simple word: guidance.

You are starting to see intimations of the future all around. Our cars are increasingly loaded with navigational guidance capabilities known as GPS systems. Polar, a fast-growing maker of heart rate monitors for athletes and exercisers, promises "graphic guidance" in its products. Yesterday, I heard a commercial on the radio from Wells Fargo. "The economy has thrown you a few curveballs and you need guidance," it stated in its outreach to small businesses.

How Cisco, SKF and RightNow Technologies have Confronted the Guidance Imperative

Indeed, the promise of reliable guidance is particularly resonant in a business to business context.

Cisco Systems, the $40 billion maker of networking systems and solutions, represents a great example of this point. The company managed to eclipse competitors by thinking of itself not just as a technology company but a “leadership consultancy.” John Chambers, the firm’s CEO, contends that the insights Cisco has gained by networking its own business can now be shared with its clients to help them drive growth. “We’re really talking about business process change,” he says. “And since we have done it for ourselves, we can show others how.”

Over more than a decade, Cisco has actively promoted its ideas about how to leverage networks for business success. It has underwritten ground-breaking research. It has published extensively. And its executives, particularly Chambers, have been visible proponents of network-driven business. Such efforts help to set Cisco apart from other players in the networking sector while opening up new markets -– such as telepresence and web conferencing –- for the company to penetrate. The company’s thought leadership positions it as a respected authority as opposed to simply another vendor.

RightNow Technologies, a hosted CRM solution provider, currently is monitoring contact centers all over the globe in a real-time fashion. Through its ‘SmartSense’ capability, it is able to track a contact center's service levels and customer satisfaction scores, and report back to client executives on a continual basis. The company even has patented algorithms that enable it to track the ‘emotional state’ of the client's customer in the course of an interaction (through an analysis of key words and language structure).

The company can track application usage on a continuous basis, which opens up new, higher-value strategy and business discussions. They can rapidly flag problems, but they also can advise their clients on how to generate business gains. RightNow's Business consultants can address key client executives with a wealth of documented findings and analysis. This leads to highly engaging conversations, opening the door to more extensive, valuable and loyal client relationships.

SKF Group, a $4.4 billion maker and marketer of bearings, seals and lubrication systems has introduced what it calls the "documented solutions program" to sell high-value offerings. Sales engineers now expertly demonstrate the "total cost of ownership" associated with an SKF solution relative to the next best alternatives. As a result, the company has increased cross-selling capabilities, enabling sales people to increase close rates by 50-60%.

What I find particularly intriguing in all these examples is the way that such companies are bulking up their consultative capabilities and establishing what I would call a "guidance premium."

Just as PC manufacturers enhanced the perceived value of their offerings by bringing "Intel Inside," today's B2B powerhouses are building superior value and differentiating themselves by, in a sense, bringing "McKinsey Inside." They now offer impressive guidance. They act as analysts and advisors, coaches and consultants. 

The Consultative Front Office

It's a moment of profound advances and process innovation in the front office. Consider:

• The C-Suite: It's no longer the CEO's job to just tell his or her company's story. Rather, the executive leader is now expected to be the thought leader in chief. What are the key issues of the day? What should one's customers expect to happen next? What's the future look like? What perils lie ahead? How does the company's strategy connect to these trends? John Chambers now offers guidance to a vast ecosystem of enterprises. They are looking to him for guidance into what investments they should be making, what challenges they must overcome and how they should organize their enterprises. 

• Marketing. “The buyer’s cycle has become decoupled from the seller’s,” argue Barry Trailer and Jim Dickie in the Harvard Business Review. As a result, buyers now initiate their buying process on their own. Through Internet-based research, they now have access to white papers, case studies, webinars, web sites and research reports. They also rely on analysts and other third-party advisors. They have become smarter and gained greater negotiating power. Given these patterns, marketing must take the steps necessary to provide thought leadership and decision-driving content early in a decision cycle. They must provide guidance at the outset if they are to engage the prospect, influence the decision making process and position their companies as the suppliers of choice. 

• Sales. The term "consultative sales" first appeared in the 1980s. It isn't new to say that sales people should act like advisors or consultants to their customers. But too many solution sellers have sought to simply listen and respond to a customer's most obvious "pain points" with their own solutions. They haven't diligently diagnosed the full scope and magnitude of their clients' problems or offered strategic guidance, as Jeff Thull contends they should. Nor have they  concentrated on "decision facilitation," as Sharon Drew Morgan contends they should. The game is changing. Now, Geoffrey Moore and his colleagues are advocating "provocation-based selling" approaches that provide "a new angle on the situation" instead of "aligning with a company's prevailing outlook." 

• Service. Once thought of as a necessary evil for product-oriented firms, it's increasingly clear that service represents the most stable and predictable revenue lines. As product companies grow and mature, they tend to recognize the mounting importance of service. Software titans such as SAP and Oracle now have greater service and maintenance revenues than product license revenues. Companies such as GE and IBM are now as well known for their services as products. But to capitalize on these revenue streams (and even identify new product sales opportunities), service professionals must become the eyes and ears of their companies in the post-implementation phase. They must identify new needs and concerns -- and guide their prospects to new levels of performance. For this reason, client coaching and consulting services are increasingly essential to maximize results and identify new possibilities.

This is a decisive moment in business. Companies are now challenged to determine how they will invest to remain profitable and competitive. Will they continue to concentrate on conventional product and service investments and ignore the emerging third category of guidance? If so, they will miss the chance to establish a guidance premium in the marketplace.

Companies that do embrace this vision will have to recognize that not all guidance is directly monetizable. In other words, you may not get to charge your clients -- directly -- for the thought leadership you create -- key insights, resources and content that guide them to a successful decision. You won't be able to bill your clients for the diagnostic and facilitative expertise of your salesforce. However, other types of guidance -- such as consulting, maintenance, training and technical support -- can be sold as distinct offerings. In fact, they represent a clear, predictable revenue source.

But recognize, whether you charge for the guidance you provide or not, it is all contributing to the value you produce and capture in the marketplace. As I see it, guidance is the element that will drive growth and differentiation, particularly in the B2B arena, in the coming years. 

While it may be a long time before another economic boom raises our collective fortunes, enterprises that capitalize on the demand for reliable guidance may be expected to experience their own impressive boomlets. Count on it.

So we are all now confronting the guidance imperative. Reliable guidance is what buyers now want from sellers -- whether or not they can express it. The question is: Who will capitalize on the moment?

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